Q1 2024 Visteon Corporation Earnings Call

Ryan Matthew Wentling: Good morning. I'm Ryan Wentling, Vice President of Investor Relations and Treasurer. Welcome to our earnings call for the first quarter of 2024. Please note this call is being recorded, and all lines have been placed on listen-only mode to prevent background noise. Before we begin this morning's call, I'd like to remind you that this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various factors, risks, and uncertainties that could cause our actual results to differ materially from those expressed in these statements.

Good morning, I'm, Brian Wendling, Vice President of Investor Relations and Treasurer welcome to our earnings call for the first quarter of 2024.

Please note. This call is being recorded and all lines have been placed on listen only mode to prevent background noise.

Before we begin this morning's call I'd like to remind you. This presentation contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.

Forward looking statements are not guarantees of future results and conditions, but rather are subject to various factors risks and uncertainties that could cause our actual results to differ materially from those expressed in these statements.

Ryan Matthew Wentling: Please refer to the page entitled Forward-Looking Information for additional details. Presentation materials for today's call were posted on the Investors section of Visteon's website this morning. Please visit investors.visteon.com to download the materials if you have not already done so.

Please refer to the page entitled forward looking information for additional details. Please.

Presentation materials for today's call were posted on the investors section of <unk> website. This morning. Please.

Please visit investors diversity on dot com to download the material if you have not already done so.

Ryan Matthew Wentling: Joining us today are Sachin Lawande, President and Chief Executive Officer, and Jerome Rouquet, Senior Vice President and Chief Financial Officer. We have scheduled the call for one hour, and we'll open the lines for your questions after Sachin and Jerome's remarks. Please limit your questions to one question and one follow-up. Thank you for joining us. Now, I will turn the call over to Sachin.

Joining us today, our thoughts on the one day, President and Chief Executive Officer, and Jerome <unk>.

Speaker Change: On your Vice President and Chief Financial Officer, we have scheduled the call for one hour and we'll open the lines for your questions after <unk> and drums remarks.

Speaker Change: Please limit your questions to one question and one follow up.

Speaker Change: Thank you for joining US now I will turn the call over to Sachin.

Speaker Change: Okay.

Sachin S. Lawande: Thank you, Ryan, and good morning, everyone. Thank you for joining us on our first quarter 2024 earnings call. I would like to start with a summary of our first quarter performance, as outlined on page 2. The team delivered another quarter of strong execution in a mixed customer vehicle production environment. Sales were $933 million, driven by strong demand for digital clusters and cockpit domain controllers. Both of these key digital cockpit products grew 20% year over year.

Sachin: Thank you Ryan and good morning, everyone.

Sachin: Thank you for joining our first quarter 2024 earnings call.

Sachin: I would like to start with a summary of our first quarter performance as outlined on page two.

Sachin: The team delivered another quarter of strong execution in the midst customer vehicle production environment.

Sachin: Sales were $933 million.

Sachin: Driven by strong demand for digital clusters and cockpit domain controllers.

Sachin: Both of these key digital cockpit products grew 20% year over year.

Sachin S. Lawande: We also saw strong demand for our BMS product, with sales more than doubling compared to the prior year. As a result of the strong product performances, our growth over the market inflected in the first quarter, returning to positive at 2% after a negative performance in Q4 of last year. As anticipated, the impact of the timing of roll-offs and roll-ons that we discussed in the Q4 2023 earnings call also impacted Q1 sales, although to a lesser extent than last quarter.

Sachin: We also saw strong demand for BMS product with sales more than doubling compared to prior year.

Sachin: As a result of the strong product performances, our growth over market infected in the first quarter.

Sachin: Turning to a positive 2% after the negative performance in Q4 of last year.

Sachin: As anticipated the impact of the timing of roll offs and roll ons that we've discussed in the Q4 2023 earnings call also impacted Q1 sales, although to a lesser extent than last quarter.

Sachin S. Lawande: Our Q1 growth over the market was also muted by some customer vehicle launch delays and a negative customer mix in China. However, we continue to demonstrate strong operational execution during the first quarter. Our adjusted EBITDA increased to $102 million, representing a margin of 10.9%. This is a 70 basis point improvement over last year. Adjusted free cash flow was $34 million in the quarter, representing a conversion ratio of 33%.

Sachin: Our Q1 growth over market was also muted by some customer vehicle launch delays and a negative customer mix in China.

Sachin: We continued to demonstrate strong operational execution during the first quarters.

Sachin: Adjusted EBITDA increased $202 million.

Sachin: Representing a margin of 10, 9%.

Sachin: This is a 70 basis point improvement over last year.

Sachin: Adjusted free cash flow was $34 million in the quarter, representing a conversion ratio of 33%.

Sachin S. Lawande: We deployed $20 million of this cash flow towards share repurchases during the quarter. We also continue to strengthen our foundation for future growth. We launched 26 new products in the quarter and won $1.4 billion of new business across 14 OEMs. We have previously discussed our strategy of reversification into the two-wheeler and light and heavy commercial vehicle markets. We launched our first smart coal product for commercial trucks and won significant business with commercial vehicles and two-wheeler OEMs in the quarter.

Sachin: We deployed $20 million of this cash flow towards share repurchases during the quarter.

Sachin: We also continued to strengthen our foundation for future growth.

Sachin: We launched six new products in the quarter and one $1 4 billion of new business across 14 Oems.

Sachin: We have previously discussed our strategy of diversification into two Wheeler and light and heavy commercial vehicle markets.

Sachin: Launched our first smartphone product for commercial trucks and won significant business with commercial vehicles and to Oems in the quarter.

Sachin S. Lawande: Overall, I'm pleased with our first quarter performance, which was in line with our expectations. It's a solid start to what we believe will be another year of sales growth, margin expansion, and cash generation in 2024. Turning to page 3.

Sachin: Overall, I'm pleased with our first quarter performance, which was in line with our expectations.

Sachin: The solid start to what we believe will be another year of sales growth margin expansion and cash generation in 2024.

Sachin: Turning to page three.

Sachin S. Lawande: Vehicle production at Visteon customers in the first quarter was down year over year and was marginally lower than industry vehicle production. However, in North America, customer vehicle production was up in the first quarter, and demand for Visteon products, in particular our digital cluster and BMS products, was also robust. This was offset somewhat by customer vehicle launch delays that muted some of our growth. However, overall, Visteon delivered a strong market performance in the region. In Europe, vehicle production was down year over year due to soft consumer demand and the withdrawal of incentives for EVs.

Sachin: Vehicle production at Visteon customers in the first quarter was down year over year and was marginally lower than industry vehicle production in North America customer vehicle production was up in the first quarter and demand for victory products in particular for our digital cluster and BMS products was also robust.

Sachin: This was offset somewhat by customer vehicle launch delays that muted some of our growth.

Sachin: Overall lithium delivered a strong market outperformance in the region.

Sachin: In Europe industry vehicle production was down year over year due to soft consumer demand individual of incentives for evs.

Sachin S. Lawande: Our customer's vehicle production was down more than the market in the region. The timing of product roll-offs and roll-ons, as well as some customer-driven launch delays with a couple of OEMs, resulted in flat sales growth over the market for us in the region. We anticipate returning to high single-digit growth over market for this region as product launches ramp up in volume in subsequent quarters. Lastly, in Asia, we saw different market dynamics in China than in the rest of Asia.

Sachin: Our customers' vehicle production was down more than market in the region.

Sachin: The timing of product roll off central loans as well as some customer driven launch delays with a couple of Oems resulted in a flat sales growth over market for us in the region.

Sachin: We anticipate returning to high single digit growth over market for this region as product launches ramp up in volume in subsequent quarters.

Sachin: Lastly in Asia, we saw different market dynamics in China than in rest of Asia.

Sachin S. Lawande: In China, while overall vehicle production was up, global OEMs saw continued loss of market share to domestic OEMs. Most of the growth in vehicle production was due to higher exports by Chinese OEMs as domestic demand slowed down. The negative customer mix resulted in our sales in China being down year over year and reduced our overall growth over the market.

Sachin: In China, while overall vehicle production was up global OEM saw continued loss of market share for domestic Oems.

Sachin: Most of the growth in vehicle production was due to higher exports by Chinese Oems as domestic demand has slowed down.

Sachin: The negative customer mix resulted in our sales in China to be down year over year and reduced our overall growth over market.

Sachin S. Lawande: On the other hand, Visteon performed very well in other Asian markets, including Japan, Korea, and India. We have been actively targeting these other Asian markets in recent years and winning substantial business with customers like Toyota, Hyundai, Tata, Mahindra, and others. Our sales outperformed customer vehicle production, resulting in positive growth in our market in the first quarter for this region. In summary, we return to positive growth over the market in the first quarter. Our diversification across both products and geographies positions us well to navigate the rapidly changing market dynamics in the industry. Turning to page 4.

Sachin: On the other hand, this John performed very well in other Asian markets, including Japan, Korea and India.

Sachin: <unk> been actively targeting these other Asian markets in recent years, and winning substantial business with customers like Toyota Hyundai Tata Mahindra and others.

Sachin: Our sales outperformed customer vehicle production, resulting in a positive growth over market in the first quarter for this region.

Sachin: In summary, we returned to positive growth over market in the first quarter.

Sachin: Diversification across both products and geographies positions us well to navigate the rapidly changing market dynamics in the industry.

Sachin: Turning to page four.

Sachin S. Lawande: Demand for our digital products was strong in the quarter, particularly for digital clusters and smart core. We are the global leader in digital clusters with a broadly diversified set of customers. The ramp-up of recently launched digital clusters at multiple customers helped this product line grow by about 20% even in a down market. However, it should be noted that there is still a significant opportunity to further penetrate the market as only a third of the vehicles being produced today are equipped with digital clusters. Our momentum in SmartCore also continued during the first quarter, driven mainly by the ramp-up of programs with Harley-Davidson and Mahindra.

Sachin: Demand for our digital products was strong in the quarter, particularly for digital clusters and Smartwater.

Sachin: Are the global leader in digital clusters, with a broadly diversified set of customers. The ramp up of recently launched digital clusters at multiple customers. This product line grew by about 20% even in a down market.

Sachin: It should be noted that there is still significant opportunity to further penetrate the market is only a third of the vehicles being produced today are equipped with digital clusters.

Sachin: Our momentum in Smart core also continued during the first quarter driven mainly by the ramp up of programs with Harley Davidson and Mahindra.

Sachin S. Lawande: We continue to see traction with customers for our SmartPort products as our customers launch new vehicle models with the product. As the industry transitions to software-defined vehicles, SmartCore puts us in an excellent position to drive this trend in partnership with our customers. In displays, the end of the life of a large display program with BMW in the prior year created a challenging comparable in the first quarter. Sales from that program ramped down in the first half of 2023, and the ramp-up of recently launched display programs with other customers should improve the year-over-year comparison for the remainder of the year. In audio infotainment, our sales were down due to the roll-off of the infotainment business at Mazda, which was partially offset by a ramp-up at Stellantis.

Sachin: We continued to see traction with customers for a smartphone products.

Sachin: Our customers launched new vehicle models with the product.

Sachin: As the industry transitions to software defined vehicles smart core puts us in an excellent position to drive this trend in partnership with our customers.

Sachin: In displays the end of life of a large display program with BMW in the prior year created a challenging comparable in the first quarter.

Sachin: Sales from that program ramp down in the first half of 2023 and the ramp up of recently launched display programs with other customers should improve the year over year comparison for the remainder of the year.

Sachin: In audio infotainment.

Sachin: Sales were down due to the roll off of infotainment business at Mazda, which was partially offset by ramp up is to lantus.

Sachin S. Lawande: We have several launches of infotainment planned for the rest of this year that will help this product line return to growth. Lastly, our sales of PMS products more than doubled compared to the first quarter of last year. As noted last quarter, we expect BMS to be a substantial contributor to our growth over market for the year as our customers ramp up battery production ahead of upcoming electric vehicle launches. Turning to page five.

Sachin: We have several launches of infotainment planned for the rest of this year that will help this product line returned to growth.

Sachin: Lastly, sales of Pms products more than doubled compared to the first quarter of last year.

Sachin: As noted last quarter.

Sachin: <unk> BMS to be a substantial contributor to our growth over market for the year as our customers ramp up battery production ahead of upcoming electric vehicle launches.

Sachin: Turning to page five.

Sachin S. Lawande: We continued our strong launch cadence with 26 products launched on vehicle models across 14 different passenger and commercial vehicle OEMs around the world. Our launches were well diversified across regions, with about half of the launches in Asian markets and the rest distributed evenly in Europe and North America. Most of the launches were for digital cockpit products, reflecting the ongoing digitalization of the broader transportation industry, including commercial vehicles. These products were launched on vehicles with different powertrains, ICE, hybrid, and battery electric, demonstrating the powertrain agnostic nature of our digital cockpit products. I would like to highlight some of the key launches during the quarter.

Sachin: We continued our strong launch cadence with 'twenty fixed products launched on vehicle models across 14 different passenger and commercial vehicle Oems around the world.

Sachin: Launches were well diversified across regions with about half of the launches in Asian markets and the rest distributed evenly in Europe and North America.

Sachin: Most of the launches for digital cockpit products, reflecting the ongoing digitalization of the broader transportation industry, including commercial vehicles.

Sachin: These products were launched on vehicles with different powertrains ice hybrid and battery electric demonstrating the powertrain agnostic nature of our digital cockpit products.

Speaker Change: I would like to highlight some of the key launches during the quarter.

Sachin S. Lawande: In Europe, we launched multiple products on the Ford Puma, which is one of the top selling vehicles in the region. The products include a digital cluster, center display, and an audio system across all trim models on ICE and hybrid powertrains. We also launched a dual 10-inch display system on the Hyundai Creta, which is a high-volume compact SUV for emerging markets. We have seen significant growth with Hyundai over the past several years with launches on key vehicles in their lineup.

Sachin: In Europe, we launched multiple products on the Ford Puma, which is one of the top selling vehicles in the region.

Sachin: The products include a digital cluster centered display and audio system across all three models on ice and hybrid powertrains.

Sachin: We also launched a dual 10 inch display system on the Hyundai Critter, which is a high volume compact SUV for emerging markets.

Sachin: We have seen significant growth with Hyundai over the past several years with launches on key vehicles in the lineup.

Sachin S. Lawande: We launched a 10-inch digital cluster on the all-new ENS2 electric crossover vehicle from Honda for the China, Japan, and Thailand markets. We're expanding our business with Japanese OEMs as they go through their digitalization journey. Lastly, we would like to spotlight the smart coal launch on Scania's heavy-duty trucks. Scania is one of the leading manufacturers of commercial heavy-duty trucks and is well known for their focus on customer experience.

Sachin: We launched attendance digital cluster on the all new E&S to electric crossover vehicle from Honda for China, Japan and patent markets.

Sachin: We're expanding our business with Japanese Oems as they go through their digitalization journey.

Sachin: Lastly, we'd like to spotlight the smartphone launch on <unk> heavy duty trucks.

Sachin: Kenya is one of the leading manufacturers of commercial heavy duty trucks and are well known for their focus on customer experience.

Sachin S. Lawande: Visteon SmartCore is the technology behind Scania's newly announced SmartDash digital dashboard, which delivers an advanced in-cabin digital experience for their drivers. It's the most advanced digital cockpit system for commercial vehicles in the market and sets the benchmark in the industry. I am pleased with the progress we have made in our strategy of diversification into adjacent transportation markets. Together with the two-wheeler market, the commercial vehicle market represents a significant potential growth driver for Visteon.

Sachin: <unk> Smart core is the technology behind <unk> newly announced smart best digital dashboard, which delivers an advanced in cabin digital experience for their drivers as.

Sachin: As the most advanced digital cockpit system for commercial vehicles in the market and sets the benchmark in the industry.

Sachin: I am pleased with the progress we've made in our strategy of diversification into adjacent transportation markets.

Sachin: Together with the tubular market the commercial vehicle market represents a significant potential growth driver for visteon.

Sachin S. Lawande: With the launch of the Scania program this quarter, Visteon adds another nameplate to our commercial vehicle customer portfolio that includes Daimler, Volvo, and Renault trucks. These OEMs are leading the digital cockpit transformation in commercial trucks, and we are very pleased to have them as our customers.

Sachin: With the launch of the Scania program. This quarter. This just adds another nameplate to our commercial vehicle customer portfolio that includes Daimler Volvo and Renault trucks.

Sachin: These Oems are leading the digital cockpit transformation and commercial trucks and we are very pleased to have them as our customers.

Sachin: Turning to page six.

Sachin S. Lawande: We had a strong start to the year with new business wins, with 1.4 billion dollars secured in the first quarter. Our new business wins were well balanced across our digital cockpit products as well as regions. Smart Core and Infotainment represented almost 40% of the total.

Sachin: We had a strong start to the year with new business wins with $1 $4 billion secured in the first quarter.

Sachin: Our new business wins were well balanced across our digital cockpit products as well as regions.

Sachin: Smart core in infotainment represented almost 40% of the total.

Sachin S. Lawande: We had multiple wins with domestic Chinese OEMs, and we also won a significant infotainment program with a European OEM for their vehicles for the Indian market. Displays also represented a large portion of our wins in Q1, with multiple wins for both passenger and commercial vehicles. We have been targeting the two-wheeler and commercial vehicle markets as a key source of growth and diversification for Visteon. This quarter, we had more than $300 million in wins in these markets, including a display program with a European commercial truck manufacturer and cluster and Bluetooth module wins with two-wheeler OEMs.

Sachin: We had multiple wins with domestic Chinese Oems and we also won a significant infotainment program with a European OEM for their vehicles for the Indian market.

Sachin: Displays also represented a large portion of our Vince in Q1 with multiple wins for both passenger and commercial vehicles.

Sachin: <unk> been targeting the two Wheeler and commercial vehicle markets as a key source of growth and diversification for Visteon disc.

Sachin S. Lawande: This quarter, we had more than $300 million of Vince for these markets, including a display program with the European commercial truck manufacturer and cluster and Bluetooth module wins with tubular Oems.

Sachin S. Lawande: The two-wheeler industry is rapidly transitioning to display-based clusters and smartphone connectivity, which is creating new opportunities for Visteon in this market. On the right side of the page, we highlight a few key wins in the first quarter.

Sachin: The two Wheeler industry is rapidly transitioning to display based clusters and smartphone connectivity, which is creating new opportunities for visteon in this market.

Sachin: On the right side of the page we highlight a few key events in the first quarter.

Sachin S. Lawande: The first win is for a 12-inch digital cluster for multiple vehicle models with a Japanese OEM. This is our second significant win with this recently added customer. This digital cluster is expected to launch on multiple vehicle models in North America and Europe starting in mid-2026. Growing our business with Japanese OEMs is a key priority for Visteon, and this win is a significant step forward in this regard. The second win is for a smart core system on an electric vehicle model for a domestic Chinese OEM for their premium vehicle brand.

Sachin: The first win is for a 12 inch digital cluster for multiple vehicle models with a Japanese OEM.

Sachin: Our second significant win that this recently added customer.

Sachin: This digital cluster is expected to launch on multiple vehicle models in North America, and Europe, starting in mid 2026.

Sachin: Growing our business with Japanese Oems is a key priority for Visteon in this win is a significant step forward in this regard.

Sachin: The second win is for a smart core system on the electric vehicle model for the domestic Chinese OEM for their premium vehicle brand.

Sachin S. Lawande: We continue to diversify our business with more exposure to domestic Chinese OEMs, reflecting the changing market dynamics in that region. Lastly, we would also highlight the robust wins for display products during the first quarter. We won six display programs with four OEMs, highlighting the progress we have made in emerging as a top supplier to the industry for this dynamic and evolving product. Our display vans covered powertrains and included passenger vehicles, light commercial vans, and heavy commercial vehicles. Turning to page seven.

Sachin: Continue to diversify our business with more exposure to domestic China Oems, reflecting the changing market dynamics in that region.

Sachin: Lastly, we would like to also highlight that robust wins for display products during the first quarter.

Sachin: The one six display programs with four Oems highlighting the progress we have made in emerging as a top supplier to the industry for this dynamic and evolving product.

Sachin: Display Vince would across powertrains and included passenger vehicles light commercial events and heavy commercial vehicles.

Sachin: Turning to page seven.

Sachin S. Lawande: Visteon has emerged as a technology leader and a trusted partner to OEMs with displays for the cockpit. This is the result of more than six years of focused investment in building top-class engineering and manufacturing capability in displays for the automotive industry. Automotive displays face different technical challenges compared to displays used in consumer electronics. Our strategy, which is unique in the industry, is based on bringing in-house all the key expertise required for the design and manufacture of increasingly complex automotive displays, complemented by a regional manufacturing footprint that is close to our customers to support their localization and decarbonization goals.

Sachin: Visteon has emerged as a technology leader and a trusted partner to Oems would displace for the cockpit.

Sachin: The result of more than six years of focused investment and building up class engineering and manufacturing capability and displays for automotive.

Sachin: Automotive displays face different technical challenges compared to displays used in consumer electronics, our strategy, which is unique in the industry is based on bringing in house all the key expertise required for design and manufacture of the increasingly complex automotive displays complemented by our regional manufacturing.

Sachin: <unk> footprint that is close to our customers to support the localization and decarbonization goals.

Sachin S. Lawande: I'll now highlight a few of our $400 million in display wins this quarter. We won our first OLED display program for a rear seat monitor for an electric vehicle with a German luxury OEM. Despite its higher cost, OLED is gaining traction with some premium and luxury vehicle brands due to its superior graphics quality and design flexibility compared to LCD displays. We also won a 10-inch LCD display business for electric vehicles with a European OEM, which will be used on several passenger and light commercial vehicles beginning in 2027. The last and highlighted one is for a 12-inch driver and center display for a European Commercial Vehicle OEM.

Sachin S. Lawande: I'll now highlight a few of our $400 million of display wins this quarter.

Sachin S. Lawande: We won our first OLED display program for his seat monitor for an electric vehicle with a German luxury OEM. Despite.

Sachin S. Lawande: Despite this higher cost OLED is gaining traction with some premium and luxury vehicle brands due to its superior graphics quality and design flexibility compared to LCD displays.

Sachin S. Lawande: Also won a 10 inch LCD display business for electric vehicles, with a European OEM, which could be used on several passenger and light commercial vehicles beginning in 2027.

Sachin S. Lawande: The last win highlighted is for a 12 inch driver and center display for the European commercial vehicle OEM.

Sachin S. Lawande: The trend of multi-display systems is also starting to impact heavy-duty commercial vehicles, which offers additional growth opportunities for us. Our in-house engineering and manufacturing capabilities allow us to be highly cost-competitive without sacrificing quality and features. Large and curved displays are difficult to transport across long distances, and manufacturing these products in the region saves logistics costs and reduces the carbon footprint for us and for our customers.

Sachin S. Lawande: The trend of multi display systems is also starting to impact heavy duty commercial vehicles, which offers additional growth opportunity for us.

Sachin S. Lawande: Our in house engineering, and manufacturing capabilities allows us to be highly cost competitive without sacrificing quality and features.

Sachin S. Lawande: <unk> and curved displays are difficult to transport across long distances and manufacturing this product in the region sales logistics costs and reduces carbon footprint for us and for our customers.

Sachin S. Lawande: Overall, displays are expected to be a meaningful driver of our growth over the medium term. We have a leading position in this market and are focused on maintaining our lead and continuing to bring more automotive-focused innovations to these products. Turning to page 8.

Sachin S. Lawande: Overall displays that are expected to be a meaningful driver of our growth over the medium term.

Sachin S. Lawande: We have a leading position in displays and are focused on maintaining our lead and continuing to bring more automotive focused innovations to these products.

Sachin S. Lawande: Turning to page eight.

Sachin S. Lawande: Europe is an important market for Visteon with a large base of customers and is also an early adopter of new digital technologies, particularly for the cockpit. Earlier this month, we opened our newest manufacturing plant in Tunisia, in Northern Africa, to serve our customers in Europe. This plant is equipped with state-of-the-art equipment to produce next-generation digital cockpit and electrification products. This plant will also manufacture displays for our customers in Europe, as discussed on the previous page. We have been operating in Tunisia for more than a decade and have been very impressed by the dedication and capabilities of our Tunisian team.

Sachin S. Lawande: Europe is an important market for visteon with a large base of customers and is also an early adopter of new digital technologies, particularly for the cockpit.

Sachin S. Lawande: Earlier this month, we opened our newest manufacturing plant in Tunisia, and Northern Africa to serve our customers in Europe.

Sachin S. Lawande: This plant is equipped with state of the art equipment to produce next generation digital cockpit and electrification products.

Sachin S. Lawande: This plant will also manufactured displays for our customers in Europe that were discussed on the previous page.

Sachin S. Lawande: We have been operating in Tunisia for more than a decade and have been very impressed by their dedication and capabilities of our <unk> team and.

Sachin S. Lawande: I'm proud to invest in the long-term future of Visteon in that country. We are very optimistic about the future in Europe. The investment in this plant, as well as other investments we are making in Europe, will provide us with the resources to drive the growth that we anticipate in this region. Turning to page 9.

Sachin S. Lawande: I am proud to invest in the long term future of Visteon in that country.

Sachin S. Lawande: We are very optimistic about our future in Europe. The investment in this plant as well as other investments, we're making in Europe will provide us with the resources to drive the growth that we anticipate in this region turning to page nine.

Sachin S. Lawande: I would now like to share our views on 2024. We had a solid start to the year with results that were largely in line with our expectations. Looking at the remainder of the year, we see several factors that have changed in the market since our Q4 2023 earnings call in February. First, S&P Global has slightly increased their forecast for vehicle production for 2024. However, we expect Visteon customer production to deteriorate slightly compared to our previous expectations, mainly driven by the weakness in China. We now expect customer production to decline by about 2% for the full year compared to our earlier expectation of a 1% reduction.

Sachin S. Lawande: I would now like to share our views on 2024.

Sachin S. Lawande: <unk> had a solid start to the year with results that were largely in line with our expectations.

Sachin S. Lawande: Looking at the remainder of the year, we see several factors that have changed in the market since our Q4 2023 earnings call in February.

Sachin S. Lawande: First S&P global has slightly increased our forecast for vehicle production for 2024, However, we expect visteon customer production to deteriorate slightly compared to our previous expectations, mainly driven by the weakness in China.

Sachin S. Lawande: <unk> now expect customer production to decline by about 2% for the full year compared to our earlier expectation of a 1% reduction.

Sachin S. Lawande: Any incentives that might be enacted in China, which has been reported in the media recently, would represent an upside to our customer production forecast. Second, BMS sales were slightly above our internal expectations for the first quarter. We expect demand for BMS to remain strong as our customers build their pipeline for vehicle launches through the rest of the year. Lastly, we expect the ramp-up of recent and upcoming product launches to help drive sequential improvements in our growth over market performance.

Sachin S. Lawande: And the incentives that might be enacted in China, which has been reported in the media recently would represent an upside to our customer production forecast.

Sachin S. Lawande: Second BMS is was slightly above our internal expectations for the first quarter.

Sachin S. Lawande: Demand for BMS to remains strong as our customers build their pipeline for vehicle launches through the rest of the year.

Sachin S. Lawande: Lastly, we expect the ramp up of recent and upcoming product launches, who helped drive sequential improvements in our growth over market performance.

Sachin S. Lawande: These launches should accelerate our growth in the market over the remainder of the year and drive higher sales. Overall, based on our current expectations, we are maintaining our sales guidance and look forward to delivering another year of sales growth in 2024. Turning to page 10.

Sachin S. Lawande: These launches should accelerate our growth over market over the remainder of the year and drive higher sales.

Sachin S. Lawande: Overall based on our current expectations, we are maintaining our sales guidance and look forward to delivering another year of sales growth in 2024.

Sachin S. Lawande: Turning to page 10.

Sachin S. Lawande: In summary, the company performed well in the first quarter. The technology profile is aligned with key trends, including the connected car, digitalization, and electrification, that will drive future growth for years to come. We delivered growth over market of 2% in the quarter, and we expect growth over market to accelerate through the rest of the year. The team continued to execute on our commercial and operational plans, which resulted in a strong adjusted EBITDA margin of 10.9%. We continue to build our foundation for the future by launching 26 new products and winning $1.4 billion in new business. Now, I will turn the presentation over to Jerome.

Sachin S. Lawande: In summary, the company performed well in the first quarter.

Jerome: Technology profile is aligned with key trends, including the connected car digitalization and electrification that will drive future growth for years to come.

Jerome: We delivered growth over market of 2% in the quarter and we expect growth over market to accelerate through the rest of the year.

Jerome: The team continued to execute on our commercial and operational plans, which resulted in our strong adjusted EBITDA margin of 10, 9%.

Jerome: We continue to build a foundation for the future by launching 26, new products and winning one $4 billion in new business.

Sachin S. Lawande: Now I will turn the presentation over to Jerome.

Jerome J. Rouquet: Thank you, Sachin, and good morning, everyone. The first quarter was a solid start to the year, with results generally in line with the expectations we outlined in February. We delivered another strong quarter of operational execution and commercial discipline. We also strengthened the foundation for future growth with a high number of product launches and significant new business wins, paving the way for continued sales growth in the coming years. Turning now to our first quarter financials, sales were $933 million.

Jerome J. Rouquet: Thank you Sachin and good morning, everyone. The first quarter was a solid start of the year with results generally in line with the expectations. We outlined in February we delivered another strong quarter of operational execution and commercial discipline. We also strengthened the foundation for future growth.

Jerome J. Rouquet: With a high number of product launches and significant new business wins paving the way for continued sales growth in the coming years.

Jerome J. Rouquet: Turning now to our first quarter financials sales were $933 million as we expected growth of the market rebounded to a positive 2% and we returned to market outperformance after the negative 2% from the fourth quarter.

Jerome J. Rouquet: As we expected, growth of the market rebounded to a positive 2%, and we returned to market outperformance after the negative 2% from the fourth quarter. We saw strong demand from our customers for our next-generation products, including digital clusters, cockpit domain controllers, and wireless BMS.

Jerome J. Rouquet: We saw strong demand from our customers for our next generation products, including digital clusters cockpit domain controllers and wireless BMS.

Jerome J. Rouquet: Our sales performance was partially offset by a modest headwind from currency and a 1% reduction in customer production with lower customer production in Europe, and Asia, partially offset by an increase in the Americas.

Jerome J. Rouquet: Our sales performance was partially offset by a modest headwind from currency and a 1% reduction in customer production, with lower customer production in Europe and Asia, partially offset by an increase in the American market. However, our supply chain maintained the much improved levels that we saw in the second half of 2023. However, recoveries were 22 million lower year over year, with minimal open market purchases and related recoveries in the first quarter of 2024.

Jerome J. Rouquet: Our supply chain maintained much improved levels that we saw in the second half of 2020, Three's recoveries were $22 million lower year over year with minimal open market purchases and related recoveries in the first quarter of 2024.

Jerome J. Rouquet: Now that we have moved past the need for open market purchases recovery should be more consistent from quarter to quarter, and therefore, we will no longer separately disclosed supply chain recovery.

Jerome J. Rouquet: Adjusted EBITDA for the quarter was $102 million compared to the prior year adjusted EBITDA benefited from operational improvements and manufacturing efficiencies, partially offset by reduced sales and increase in net engineering and a modest headwind from foreign exchange.

Jerome J. Rouquet: Now that we have moved past the need for open market purchases, recoveries should be more consistent from quarter to quarter, and therefore, we will no longer separately disclose supply chain recoveries. Adjusted EBDAP for the quarter was $102 million. Compared to the prior year, Adjusted EBDAP benefited from operational improvements and manufacturing efficiencies, partially offset by reduced sales, an increase in net engineering, and a modest headwind from foreign exchange. EBITDA margin in the quarter was 10.9%.

Jerome J. Rouquet: EBITDA margin in the quarter was 10, 9%.

Jerome J. Rouquet: This level of margin is consistent with the run rate of approximately 11%, we add exiting the fourth quarter of 2023 and this despite sequentially lower sales, our first quarter margin performance positions us well to deliver on our targeted margin improvement in 2024.

Jerome J. Rouquet: This level of margin is consistent with the run rate of approximately 11% we had exiting the fourth quarter of 2023, and this despite sequentially lower sales. Our first quarter margin performance positions us well to deliver on our targeted margin improvement in 2024. Adjusted free cash flow was $34 million, a strong performance for the first quarter, which is traditionally an outflow. The improvement versus the prior year was driven primarily by reduced working capital outflow. We repurchased 20 million shares during the first quarter at an average price of approximately $117 per share.

Jerome J. Rouquet: Adjusted free cash flow was 34 million a strong performance for the first quarter, which is traditionally an outflow.

Jerome J. Rouquet: The improvement versus the prior year was driven primarily by reduced working capital outflow.

Jerome J. Rouquet: We repurchased $20 million of shares during the first quarter at an average price of approximately $117 per share.

Jerome J. Rouquet: This brings our repurchases under our existing plan to $126 million as of the end of the first quarter.

Jerome J. Rouquet: We ended Q1 with total cash of $507 million and a net cash position of $175 million.

Jerome J. Rouquet: We remain on track to deliver strong sales growth and margin expansion in 2024, thanks to the acceleration throughout the year of recent and new product launches attaching highlighted earlier.

Jerome J. Rouquet: This brings our repurchases under our existing plan to $126 million as of the end of the first quarter. We ended Q1 with total cash of $507 million and a net cash position of $175 million. We remain on track to deliver strong sales growth and margin expansion in 2024 thanks to the acceleration throughout the year of recent and new product launches that Sachin highlighted earlier. Our strong commercial and operational execution continues to support incrementals in the high teens and free cash flow conversion of approximately 33%. Thursday to page 12.

Jerome J. Rouquet: Strong commercial and operational execution continues to support Incrementals in the high teens and free cash flow conversion of approximately 33%.

Jerome J. Rouquet: Turning to page 12.

Jerome J. Rouquet: Sales in the first quarter of $933 million for a slight decline compared to prior year. The lower sales resulted primarily from lower pricing related to semiconductor recoveries and annual customer price reductions slightly negative year over year customer production and a modest headwind.

Jerome J. Rouquet: From currency, partially offset by higher volumes driven by a positive growth of our markets.

Jerome J. Rouquet: Visteon customer vehicle production declined 1% from the prior year.

Jerome J. Rouquet: Sales in the first quarter of $933 million were a slight decline compared to prior years. The lower sales resulted primarily from lower pricing related to semiconductor recoveries and annual customer price reductions, slightly negative year-over-year customer production, and a modest headwind from currency, partially offset by higher volumes driven by positive growth of the market. Visteon customer vehicle production declined 1% from the prior year.

Jerome J. Rouquet: Lower customer production was driven by weaker production in Europe and in Asia, partially offset by strong performance in North America as the Detroit three production rebounded after the UAW strike in the fourth quarter.

Jerome J. Rouquet: Compared to our customers' production, we delivered a positive 2% growth over market in the first quarter, primarily driven by strong demand for digital clusters and BMS.

Jerome J. Rouquet: On a regional basis market outperformance was highest in Asia, when excluding China as well as in the Americas supported by both launches and strong demand for new products.

Jerome J. Rouquet: Lower customer production was driven by weaker production in Europe and in Asia, partially offset by strong performance in North America, as Detroit 3 production rebounded after the UAW strike in the fourth quarter. Compared to our customers' production, we delivered 2% growth over the market in the first quarter, primarily driven by strong demand for digital clusters and BMS. On a regional basis, market outperformance was highest in Asia, when excluding China, as well as in the Americas, supported by both launches and strong demand for new products.

Jerome J. Rouquet: Europe was essentially in line with the market with sales muted due to the timing of Rollouts and roll ons mentioned last quarter as well as some customer launch delays.

Jerome J. Rouquet: China underperformed the market due to the roll off of programs with international Oems and negative vehicle mix with domestic Oems.

Jerome J. Rouquet: We continue to be focused on commercial discipline, combining our discussions with customers on both recoveries and annual pricing.

Jerome J. Rouquet: We made significant progress on recoveries and pricing negotiation with customers in the first quarter and we will remain disciplined on a go forward basis.

Jerome J. Rouquet: Europe was essentially in line with the market, with sales muted due to the timing of roll-offs and roll-ons mentioned last quarter, as well as some customer launch delays. China underperformed the market due to the roll-off of programs with international OEMs and negative vehicle mix with domestic OEMs.

Jerome J. Rouquet: Adjusted EBITDA was $102 million, an increase of $3 million compared to the prior year higher adjusted EBITDA was driven by strong operating and cost performance across the company.

Jerome J. Rouquet: Net engineering increased to $4 million year over year, which was primarily due to the timing of recoveries.

Jerome J. Rouquet: We continue to be focused on commercial discipline, combining our discussions with customers on both recoveries and annual pricing. We made significant progress on recoveries and pricing negotiations with customers in the first quarter, and we will remain disciplined on a go-forward basis. Adjusted EBITDA was $102 million, an increase of $3 million compared to the prior year. Higher Adjusted EBITDA was driven by strong operating and cost performance across the company. Net engineering increased 4 million year over year, which was primarily due to the timing of recoveries.

Jerome J. Rouquet: Percentage of sales net engineering was six 4% in the quarter and we continue to expect it to be in the mid 5% range for the full year adjusted.

Jerome J. Rouquet: Adjusted SG&A increased $1 million year over year to $45 million or four 8% of sales. We continue to expect SG&A to be in the mid 4% range for the full year.

Jerome J. Rouquet: Adjusted EBITDA margin improved to 10, 9% in the first quarter of 2024 70 basis point improvement year over year.

Jerome J. Rouquet: Q1 results were largely in line with our expectations as the weaker than expected top line from Europe, and Asia was largely offset by just trends in the Americas.

Jerome J. Rouquet: As a percentage of sales, net engineering was 6.4% in the quarter, and we continue to expect it to be in the mid 5% range for the full year. Adjusted SG&A increased by one million euros a year to 45 million, or 4.8% of sales. We continue to expect SG&A to be in the mid 4% range for the full year. The adjusted EBITDA margin improved to 10.9% in the first quarter of 2024, a 70 basis point improvement year over year. Q1 results were largely in line with our expectations, as the weaker-than-expected top line from Europe and Asia was largely offset by the strength in the Americas.

Jerome J. Rouquet: Through continuous focus on execution, we were able to maintain our 2023 margin run rates and this despite lower sales in the first quarter.

Jerome J. Rouquet: Our Q1 EBITDA performance sets us up nicely for further margin expansion looking forward, we anticipate maintaining our momentum from recent quarters with sales and EBITDA expected to grow sequentially throughout the year. Thanks to the acceleration of our growth of our markets.

Jerome J. Rouquet: In the second quarter, we currently expect sales to increase sequentially to slightly more than $1 billion as we benefit from the continued ramp up of recent and new product launches across our digital cockpit and electrification products turning to page 13.

Jerome J. Rouquet: Starting with the balance sheet, we ended the quarter with a total cash position of $507 million and a net cash position of $175 million are.

Jerome J. Rouquet: Through continuous focus on execution, we were able to maintain our 2023 margin run rate, and this despite lower sales in the first quarter. Our Q1 EBITDA performance sets us up nicely for further margin expansion. Looking forward, we anticipate maintaining our momentum from recent quarters, with sales and EBITDA expected to grow sequentially throughout the year, thanks to the acceleration of our growth in the market. In the second quarter, we currently expect sales to increase sequentially to slightly more than $1 billion as we benefit from the continued ramp-up of recent and new product launches across our digital, cockpit, and electrification products. Turning to page 13.

Jerome J. Rouquet: Our strong balance sheet continues to provide us with significant flexibility to allocate capital.

Jerome J. Rouquet: Turning to cash flow, we generated strong adjusted free cash flow of $34 million in the first quarter of 2024. This is a 71 million improvement compared to the prior year, primarily due to the lower outflow from working capital, partially offset by higher capital expenditures.

Jerome J. Rouquet: The outflow related to trade and other working capital declined substantially year over year with a strong improvement in the first quarter of 2024, we're still expecting a working capital outflow for the remainder of 2024 as we build additional working capital to support growth.

Jerome J. Rouquet: During the first quarter of 2024, our inventory levels increased as we were able to rebuild adequate safety stock of critical components. Following the stabilization of the semiconductor supply chain.

Jerome J. Rouquet: Starting with the balance sheet, we ended the quarter with a total cash position of $507 million and a net cash position of $175 million. Our strong balance sheet continues to provide us with significant flexibility to allocate capital. Turning to cash flow, we generated strong adjusted free cash flow of $34 million in the first quarter of 2024. This is a $71 million improvement compared to the prior year, primarily due to the lower outflow from working capital, partially offset by higher capital expenditures. The outflow related to trade and other working capital declined substantially year over year, with a strong improvement in the first quarter of 2024.

Jerome J. Rouquet: Cash taxes were lower in the quarter versus prior year due to the timing of discrete tax payments in Q1 of last year.

Jerome J. Rouquet: Interest payments remained low and primarily relate to our term loan which were more than offset by interest income on our invested cash.

Jerome J. Rouquet: Capex was $37 million in the quarter and remains on track for $145 million for the full year.

Jerome J. Rouquet: These investments will allow our operations to deliver on future growth examples of Capex spending this quarter included our new plant in Tunisia mentioned by such an earlier as well as continued investment in Dms and display capacity as well as capability that will support our growth for years to come we will.

Jerome J. Rouquet: We're still expecting a working capital outflow for the remainder of 2024 as we build additional working capital to support growth. During the first quarter of 2024, our inventory levels increased as we were able to rebuild adequate safety stock of critical components following the stabilization of the semiconductor supply chain. Cash taxes were lower in the quarter versus the prior due to the timing of discrete tax payments in Q1 of last year. Interest payments remained low and primarily related to our term loan.

Jerome J. Rouquet: To look for ways to deploy capital to support organic growth initiatives at attractive returns our success in allocating capital to high return projects is illustrated by our return on invested capital of 16%, which is at the top of the peer group turning to page 14.

Jerome J. Rouquet: Visteon remains a compelling long term investment opportunity, we benefit from the higher demand for more digital content in the cockpit, regardless of powertrain and the growth of electric and hybrid vehicles Visteon. These uniquely positioned for multiyear topline growth margin expansion and free cash flow.

Jerome J. Rouquet: These were more than offset by interest income on our invested cash. CapEx was $37 million in the quarter and remains on track for $145 million for the full year. These investments will allow our operations to deliver on future growth. Examples of CAPEX spending this quarter included our new plant in Tunisia, mentioned by Sachin earlier, as well as continued investment in BMS and display capacity, as well as capability, that will support our growth for the years to come.

Jerome J. Rouquet: Generation, while our strong balance sheet provides us with significant flexibility to execute on our plan. Thank you for your time today I would like now to open the call for your questions.

Speaker Change: At this time I'd like to ask a question Chris Star one on your telephone keypad again that is star and the number one we'll pause for just a moment to compile the Q&A roster.

Jerome J. Rouquet: Your first question is from the line of Dan Levy with Barclays.

Jerome J. Rouquet: Okay.

Jerome J. Rouquet: Hi, good morning.

Jerome J. Rouquet: We'll continue to look for ways to deploy capital to support organic growth initiatives at attractive returns. Our success in allocating capital to high-return projects is illustrated by our return on invested capital of 16%, which is at the top of the peer group. Turning to page 14. Visteon remains a compelling long-term investment opportunity. We benefit from the higher demand for more digital content in the cockpit, regardless of powertrain, and the growth of electric and hybrid vehicles.

Speaker Change: Thank you for taking the question.

Speaker Change: I wanted to start with.

Speaker Change: Hi, good morning.

Jerome J. Rouquet: The growth over market in the first quarter.

Jerome J. Rouquet: I think you touched on it there was some issues with.

Jerome J. Rouquet: Program roll off.

Jerome J. Rouquet: But maybe any more color on sort of.

Jerome J. Rouquet: The growth of the market that we saw in <unk> and what is the line of sight.

Jerome J. Rouquet: That you had today growth of our market ramp that youre expecting in <unk>.

Jerome J. Rouquet: Over the remainder of the year are there key launches that you would flag key regions that you expect to reverse.

Jerome J. Rouquet: Visteon is uniquely positioned for multi-year top-line growth, margin expansion, and free cash flow generation, while our strong balance sheet provides us with significant flexibility to execute on our plan. Thank you for your time today. I would like now to open the call to your questions.

Jerome J. Rouquet: Yeah, Thanks, Dan it's Jeff.

Speaker Change: I'll take that question, so we had signal.

Jerome J. Rouquet: The end of the year that we would be seeing a progressive ramp up of our growth of the market during 2024.

Jerome J. Rouquet: <unk>.

Jerome J. Rouquet: We returned to a positive growth market in Q1 as expected.

Operator: At this time, if you'd like to ask a question, press star 1 on your telephone keypad. Again, that is star and the number 1. We'll pause for just a moment to compile the Q&A roster. Your first question is from the line of Dan Levy with Barclays.

Jerome J. Rouquet: Still low 2% and there are a few reasons for that we still have got some remains of the air pocket that we talked about in Q4 as you said between Rollouts and Rollouts.

Dan Meir Levy: We also still have a fairly significant China mix and as you know international OEM players are much less successful than domestic players where visteon has got less content.

Dan Meir Levy: Hi, good morning. Thank you for taking the questions. Um, I wanted to start with... The growth of our market in the first quarter, you know. I think you touched on it, there were some issues with program roll-off, but maybe any more color on sort of the growth of the market that we saw in 1Q, and what is the line of sight that you have to the growth of the market ramp that you're expecting over the remainder of the year? Are there key launches that you would flag, key regions that you expect to reverse?

Dan Meir Levy: We also had a few large delays in Q1 and by now these ones are mostly resolved and all this was partially offset by better than expected Vms sales in Q1 as you know GM is launching their entire range of ultimate products. So that has helped us.

Dan Meir Levy: In Q1, so as we look forward and look at Q2, we're expecting that growth of the market in Q2 will improve significantly.

Jerome J. Rouquet: Yes, thanks, Dan. It's Jerome.

Jerome J. Rouquet: I'll take that question. So, we had a signal at the end of the year that we would be seeing a progressive ramp-up of growth in the market during 2024. And we returned to positive growth in the market in Q1, as expected, but still a low 2%. And there are a few reasons for that. We still have some remnants of the air pocket that we talked about in Q4, as you said, between roll offs and roll ons. We also still have a fairly significant China mix. And as you know, international OEM players are much less successful than domestic players, where Visteon has got less content.

Jerome: Two I would say high single digits and that's implied in fact in the Q2.

Jerome J. Rouquet: Sales number that I gave which we think will be slightly over 1 billion.

Jerome J. Rouquet: And.

Jerome J. Rouquet: The reason for this is that we had about 26 program launched in Q1 and now we're going to see these programs ramping up and that will partially if not totally negate the air pocket that we saw in previous quarters. We are also.

Jerome J. Rouquet: Have launches that were delayed in Q1 and that are now ramping up according to expectations in Q2.

Jerome J. Rouquet: We also had a few launch delays in Q1, and by now, these ones are mostly resolved. And all this was partially offset by better than expected BMS sales in Q1. As you know, GM is launching their entire range of Ultimate products.

Jerome J. Rouquet: On the forward side for example, we have the Ford Cougar as well as the Ford Transit, which were slightly delayed and we are now in full ramp up in the in Q2.

Jerome J. Rouquet: We are expecting also BMS to continue to grow and that will help us on a go forward basis GM was pretty positive as well regarding the launch cadence during their call issue. This week.

Jerome J. Rouquet: So that helped us a little bit in Q1. So as we look forward and look at Q2, we're expecting that growth of the market in Q2 will improve significantly to, I would say, high single digits. And that's implied, in fact, in the Q2 sales number that I gave, which we think will be slightly over a billion.

Jerome J. Rouquet: So overall, we're seeing a lot of good momentum going into Q2.

Jerome J. Rouquet: It's obviously early to talk even about April but we are seeing good momentum already in the month of April and that confirms all these data points that I was highlighting so for the rest of the year. We continue we continue to see an acceleration of the growth of our market.

Jerome J. Rouquet: And the reason for this is that we had about 26 program launches in Q1, and we're now going to see these programs ramping up, and that will partially, if not totally, negate the air pocket that we saw in previous quarters. We also have launches that were delayed in Q1 and that are now ramping up according to expectations. In Q2, on the Ford side, for example, we have the Ford Kuga, as well as the Ford Transit, which were slightly delayed, and they are now in full ramp-up in Q2.

Jerome J. Rouquet: Similar factors will come into play and we will see an acceleration as well of the BMS launch with with GM.

Jerome J. Rouquet: If you step back.

Jerome J. Rouquet: We are really expecting for 2024th to get back to the growth of our market that we had seen in prior years and that's really on the account of all the business wins that we've had in the last few years as well as the fairly significant amount of launches that we had in 2003 as a reminder, we had about 120.

Jerome J. Rouquet: We are also expecting BMS to continue to grow, and that will help us on a go-forward basis. GM was pretty positive as well regarding their launch cadence during their call this year. So overall, we're seeing a lot of good momentum going into Q2. It's obviously early to talk even about April, but we're seeing good momentum already in the month of April. And that confirms all these data points that I was highlighting.

Jerome J. Rouquet: Nine launches in 2003, we've launched in Q1 'twenty six.

Jerome J. Rouquet: Alex and we're expecting essentially a very strong year in terms of launches for FY 'twenty four.

Speaker Change: Thank you and just just to clarify that.

Jerome J. Rouquet: Youre reiterating your sales guidance production assumption slightly weaker so I assume that.

Jerome J. Rouquet: Low double digit to 10 to 12 points of growth over market guidance that still impacts correct.

Jerome J. Rouquet: That is correct as I said Q1 really develop pretty much as expected we had highlighted that sales would be lower sequentially as well slightly year over year.

Jerome J. Rouquet: So for the rest of the year, we continue to see an acceleration of the growth of the market. Similar factors will come into play, and we'll see an acceleration as well of the BMS launch with GM. So if you step back, we are really expecting 2024 to get back to the growth of a market that we had seen in previous years. And that's really on the back of all the business wins that we've had in the last few years, as well as the fairly significant number of launches that we had in 23. As a reminder, we had about 129 launches in 23. We've launched 26 products in Q1, and we're expecting essentially a very strong year in terms of launches for 24.

Jerome J. Rouquet: We do see we did see a slight deterioration in customer production.

Jerome J. Rouquet: 1% versus prior guide largely coming from China mix and at the same time, we've heard.

Jerome J. Rouquet: And there is a lot of comment in the press around China incentives that could potentially help the second half of the year. So at this stage it's absolutely.

Jerome J. Rouquet: In line with what we had talked about two months ago.

Speaker Change: Okay. Thank you.

Speaker Change: As a follow up wanted to ask about China, and I think we're all well aware of that.

Jerome J. Rouquet: The mix issue.

Jerome J. Rouquet: Really been an issue for the entire supply base.

Jerome J. Rouquet: Maybe you can.

Speaker Change: You talked about increasing your mix with the domestics, maybe you can give us any further color on.

Jerome J. Rouquet: Thank you. And just to clarify that, you know, you're reiterating your failed guidance, the production assumption is slightly weaker. So I assume that the low double digit, the 10 to 12 points of growth over market guidance, that's still intact, correct?

Jerome J. Rouquet: The line of sight that you have that overcoming these mix issues competitively are you well positioned is that the right domestics that you have in China. So just any more voice over on China that can give us some confidence.

Jerome J. Rouquet: That is correct. As I said, Q1 really developed pretty much as expected. We had highlighted that sales would be lower sequentially as well as slightly year over year. However, we did see a slight deterioration in customer production, 1% versus prior guide, largely coming from the China mix. And at the same time, we've heard, and there are a lot of comments in the press around Chinese incentives that could potentially help the second half of the year. So at this stage, it's absolutely in line with what we talked about two months ago.

Speaker Change: She is being overcome yes, Dan this is such a I'll take that one so maybe a little bit of context would be helpful. So.

Jerome J. Rouquet: If you go back a couple of years.

Jerome J. Rouquet: The global Oems operating in China had a larger market share.

Jerome J. Rouquet: Since 2022.

Jerome J. Rouquet: <unk> has been shifting in favor of domestic Oems and it really accelerated in 2023.

Jerome J. Rouquet: When you look at Q1.

Dan Meir Levy: Okay, thank you. As a follow-up, I wanted to ask about China, and I think we're all well aware of the negative mix issues that have really been an issue for the entire supply base. Maybe you can, you know, you talked about increasing your mix with the domestics. Maybe you can give us any further color on the line of sight that you have that, you know, overcomes these mix issues. Competitively, are you well positioned?

Jerome J. Rouquet: Sure mix was 60%.

Dan Meir Levy: 40% in favor of the domestic Oems in China, as compared to 55% for domestic Oems and <unk>.

Dan Meir Levy: Full year 2023, now most of that growth the domestic Oems have come from Oems such as BYD Jeanie.

Dan Meir Levy: Cherry Chen for example, and we have been pretty busy anticipating there is shifting our business.

Sachin S. Lawande: Is it the right domestic that you have in China? So, any more voiceover on China that can give us some confidence on these issues being overcome? Yeah, Dan.

Dan: More school this domestic Oems and over the past couple of years have done very well in terms of.

Sachin S. Lawande: Yeah, Dan, this is Sachin. I'll take that one.

Sachin S. Lawande: So maybe a little bit of context would be helpful. So if you go back a couple of years, the global OEMs operating in China had a larger market share. But since 2022, that share has been shifting in favor of domestic OEMs, and it really accelerated in 2023.

Dan: Developing business with for example, Julie who is currently one of our largest customers already.

Sachin: In addition to that we have launched smart core with.

Sachin S. Lawande: GMC.

Speaker Change: And more launches scheduled.

Sachin: And we continue to work closely with Tim Gunn and Dong funds in.

Sachin S. Lawande: So, when you look at Q1, the share mix was 60% and 40% in favor of the domestic OEMs in China, as compared to 55% for domestic OEMs in full year 2023. Now, most of that growth with domestic OEMs has come from companies such as BYD, Geely, and Jerry Changan, for example. And we have been pretty busy anticipating this, shifting our business more to these domestic OEMs. And over the past couple of years, I've done very well in terms of developing business with, for example, Geely, who is currently one of our largest customers already.

Sachin S. Lawande: Particular in terms of developing business with them.

Sachin S. Lawande: So.

Sachin S. Lawande: We are very well positioned, especially with smartwater with experience that we have.

Sachin S. Lawande: Already supporting customers in China to be able to broaden our base.

Sachin S. Lawande: It has been a very dire.

Sachin S. Lawande: NAMIC market the market shares have been shifting.

Sachin S. Lawande: Almost quarter by quarter, new entrants have come in such as Huawei and.

Sachin S. Lawande: Some of the phone makers that have come into the automotive, especially for Evs.

Sachin S. Lawande: Our approach has been.

Sachin S. Lawande: In addition to that, we have launched SmartCore with JMC, and more launches are scheduled, and we continue to work closely with Chang'an and Dongfeng, in particular in terms of developing our business with them. So, I feel that we are very well positioned, especially with Smart Core, with the experience that we have already gained supporting customers in China to be able to broaden our base. It has been a very dynamic market. Market shares have been shifting almost quarter by quarter.

Sachin S. Lawande: Focus on the ones that we believe will be.

Sachin S. Lawande: In the market long term, but also I would mention that we believe that the European luxury Oems as well as the Japanese Oems in the long run we will do well in that market and we continue to work with them.

Sachin S. Lawande: Their products in China as well. So overall I think we are making good progress we expect the mix to be slightly more negative as Jerome mentioned.

Sachin S. Lawande: Earlier, but then depending upon if we see the incentives come through that might change our perspective on 2024.

Sachin S. Lawande: New entrants have come in, such as Huawei and some of the phone makers that have come into the automotive sector, especially for EVs. So, our approach has been to focus on the ones that we believe will be in the market long term. But also, I would mention that we believe that the European luxury OEMs, as well as the Japanese OEMs, in the long run, will do well in that market, and we continue to work with them on their products in China as well.

Speaker Change: Thank you.

Sachin S. Lawande: Your next question is from the line of Joe Spak with UBS.

Sachin S. Lawande: Yes.

Sachin S. Lawande: Thanks, Good morning.

Sachin S. Lawande: Just to.

Sachin S. Lawande: Yes.

Sachin S. Lawande: Confirm here.

Sachin S. Lawande: With the lower production than sort of what you thought does that are you implying you are sort of more comfortable at the lower end of your of your guidance range or or is there some growth over market offsets that keeps you comfortable with in either of the med or at the high end potentially.

Speaker Change: Yes, Thanks, Joe at this stage, we're not changing our guidance for 2024, we're still giving the range.

Sachin S. Lawande: So, overall, I think we are making good progress. We expect the mix to be slightly more negative, as Jerome mentioned earlier. But then, depending upon whether we see the incentives come through, that might change our perspective on 2024.

Sachin S. Lawande: As I mentioned.

Sachin S. Lawande: There was a slight deterioration.

Sachin S. Lawande: We are watching and look at how the markets are going to develop its very early to.

Sachin S. Lawande: Two.

Operator: Your next question is from a line by Joe Spak with UBS.

Sachin S. Lawande: To change anything I would say, so pretty happy with the way.

Joseph Robert Spak: Thanks. Good morning. Um, just to, um, confirm here, with the lower production than you thought, are you implying you're sort of more comfortable with the lower end of your guidance range, or is there some growth over market offsets that keeps you comfortable with either the mid or the high end, potentially?

Operator: Things developed in Q1, we've got high expectations for Q2 with sales slightly over $1 billion, and then I will take it one quarter at a time.

Joseph Robert Spak: I guess just to quickly follow up on that like given given some of these.

Jerome J. Rouquet: Yeah, thanks, Joe. At this stage, we're not changing our guidance for 2024. We're still giving the range. As I mentioned, there was a slight deterioration. We are watching and looking at how the markets are going to develop. It's very early to change anything, I would say. So pretty happy with the way things developed in Q1. We've got high expectations for Q2, which sells slightly over a billion, and then I will take it one...

Jerome J. Rouquet: Sure.

Jerome J. Rouquet: Customer changes and sort of share shifts like.

Joe: I think when you guided.

Joe: Last quarter, you also sort of gave a like 8% base sales growth and I'm wondering if.

Joe: You actually feel maybe more comfortable with that target then with the growth over market target just considering some of the customer shifts, particularly in China is that does that.

Speaker Change: Fair or.

Joe: That's a good point.

Joseph Robert Spak: I guess just to quickly follow up on that, like, given some of these, you know, customer changes and sort of share shifts, like, I think when you guided, you know, last quarter, you also sort of gave a, like, 8% base sales growth. And I'm wondering if you actually feel maybe more comfortable with that target than with the growth over market target just considering some of the customer shifts, particularly in China. Is that fair? Yeah,

Jerome J. Rouquet: When we talk about growth over market. It also brings into question a lot of the production dynamics that are hard to necessarily predict but what's really more important for us has been our absolute base sales growth, which for our 2026 target.

Joseph Robert Spak: We needed to hit 8% CAGR in sales.

Joseph Robert Spak: So that's what we're really focused on.

Sachin S. Lawande: That's a good point. And, you know, when we talk about growth in the market, it also brings into question a lot of the production dynamics that are hard to necessarily predict. But what's really more important for us has been our absolute base sales growth, which for our 2026 target, we needed to hit an 8% kegger in sales. So that's what we are really focused on in terms of our execution and delivery. Growth over the market depends a little bit on other factors.

Joseph Robert Spak: Tons of our execution.

Sachin S. Lawande: And delivery.

Sachin S. Lawande: Growth of our market defense, a little bit on other factors, but what we've said was at the beginning of the year the assumption that we had for MVP.

Sachin S. Lawande: The implied little market would need to be in the 10% to 12% range.

Sachin S. Lawande: Good shifts depending upon so many other factors, but I'm more focused on the underlying sales growth.

Sachin S. Lawande: But what we said at the beginning of the year, the assumption that we had for LVP, the implied growth over market would need to be in the 10% to 12% range. That could shift depending upon so many other factors, but I'm more focused on the underlying sales growth.

Sachin S. Lawande: Okay, and maybe one quick one on just BMS.

Speaker Change: It sounds like that was helpful. This quarter.

Sachin S. Lawande: Does that.

Sachin S. Lawande: This shipping of a BMS system sort of differ maybe from some of the other products like has that shipped more more in advance just given some of the work that needs to be done on the pack.

Sachin S. Lawande: And maybe one quick one on just BMS, it sounds like that was helpful this quarter. Does that, does shipping of a BMS system sort of differ maybe from some of the other products? Like, is that shipped more in advance, just given some of the work that needs to be done on the pack? And I think you also mentioned that the start of the SOP for the second BMS customer was this quarter. So how do you expect that to ramp up? And is the third still on track for later this year as well? Yeah, Joe, you are absolutely correct.

Sachin S. Lawande: And I think you also mentioned the start of the S&P for the second Vms customer was this quarter. So how do you expect that to ramp and is the third still on track for later this year as well.

Joe: Yes, Joe.

Joe: Certainly correct. So the battery manufacturing challenges that Oems have faced.

Sachin S. Lawande: That have been well publicized.

Speaker Change: Cause the shipping pattern to.

Sachin S. Lawande: Be pulled up a bit ahead of the launches. So we typically supply to the battery pack.

Sachin S. Lawande: Yeah, Joe, you are absolutely correct. So the battery manufacturing challenges that OEMs have faced, which have been well publicized, have caused the shipping pattern to be pulled up a bit ahead of the launches. So we typically supply to the battery pack plants, which takes a few, maybe even sometimes months ahead of the vehicle launch. So that's definitely one of the dynamics.

Sachin S. Lawande: Plants, which.

Sachin S. Lawande: It takes a few maybe even sometimes months ahead of the vehicle launch so that's definitely one of the dynamics.

Sachin S. Lawande: Absolutely on track.

Sachin S. Lawande: The second customer that we have started to ship ahead of their launch plans and the <unk>.

Sachin S. Lawande: Process of manufacturing.

Sachin S. Lawande: We are absolutely on track with the second customer that we have started to ship ahead of their vehicle launch plants. They are in the process of manufacturing their battery packs. And the third is on track for later in the year.

Sachin S. Lawande: And the third is on track for later in the year.

Speaker Change: Thanks, so much.

Speaker Change: Thank you.

Sachin S. Lawande: Your next question is from the line of Luke junk with Baird.

Speaker Change: Good morning, Thanks for taking the questions first question, maybe a bigger picture question session and just be.

Operator: Your next question is from the line of Luke Junk with Baird.

Luke L. Junk: Good morning, thanks for taking the questions. First question, maybe a bigger picture question, Sachin.

Luke L. Junk: Curious for your updated thoughts on just how to position the company with local Chinese Oems and I'm thinking more from a process standpoint cost repeatability getting to market more quickly and if the first quarter win that you had with this premium brand is may be a window.

Sachin S. Lawande: I'd just be curious for your updated thoughts on just how to position the company with local Chinese OEMs. And I'm thinking more from a process standpoint, cost repeatability, getting to market more quickly, and you know, if the first quarter win that you had with this premium brand is maybe a window into how you're executing in China right now.

Sachin S. Lawande: And how you're executing in China right now.

Sachin S. Lawande: Yes, so as you know look the market in China is very focused on very high end high complexity systems.

Sachin S. Lawande: Yeah, so as you know, look, the market in China is very focused on very high-end, high-complexity systems with multiple displays in the cockpit and a lot of software and processing. So they tend to be very complex, high-value, and high-content type of businesses. It takes actually a little bit longer in terms of the development time as well on account of the complexity.

Sachin S. Lawande: Multiple displays in the cockpit and a lot of software and processing so.

Sachin S. Lawande: It tend to be very complex high value.

Sachin S. Lawande: And high content type of businesses.

Sachin S. Lawande: Actually a little bit longer in terms of.

Sachin S. Lawande: The development time as well on account of the complexity, but.

Sachin S. Lawande: But our platform approach with SmartCore has been hugely important and critical to us being able to win and deploy the systems. So we feel that we have a strong reputation in the market now based on the launches that we've had, especially with Geely, also with JMC, which we have talked about already. That puts us in a, I would say, very small group of suppliers with proven capabilities in the region to support their launch plans.

Sachin S. Lawande: That form approach with smartphone has been hugely important and critical in us being able to win.

Sachin S. Lawande: And deploy.

Sachin S. Lawande: Deploy the systems so.

Sachin S. Lawande: We feel that we have a strong reputation in the market now based on the launches that we've had especially with Chile also with GMC that we've talked about already alright that puts us in a very small group of suppliers with proven capabilities in the region to sue.

Sachin S. Lawande: Port their launch plans being a very competitive market lots of changing dynamics in fact somebody some.

Sachin S. Lawande: Being a very competitive market, lots of changing dynamics, in fact, somebody, some leader of an OEM that I talked to said they have to change their plans in terms of competitive positioning every quarter. And as a supplier, we have to react to that. So I feel like we are well-positioned with our platform strategy. Our next focus for China is going to be displays. We believe we can also help our customers with displays; especially many of our customers are now focused on export markets as the demand in domestic markets has slowed down.

Sachin S. Lawande: Neither of an OEM did I talked to said they have to change their plans in terms of competitive positioning every quarter and as a supplier we have to react to it.

Sachin S. Lawande: So I feel like we are well positioned with our platform strategy.

Sachin S. Lawande: Next focus for China is going to be displaced.

Sachin S. Lawande: We believe we can also help our customers with displays especially.

Sachin S. Lawande: Many of our customers are now focused on export markets as the demand the domestic markets have slowed down and we are in a very good position with our footprint outside of China to support their growth plans for export.

Sachin S. Lawande: And we are in a very good position with our footprint outside of China to support their growth plans for export. So I think if you look at how we are positioning ourselves, it's really SmartCore displays and then being their partner for helping them in their exports.

Sachin S. Lawande: I think.

Sachin S. Lawande: Look at how we are positioning ourselves really smart displays and then being their partner for helping them in their exports.

Luke L. Junk: And then for my follow-up, just hoping you could comment on... Capital allocation and any changes, maybe the update on share repurchase, and whether or not where the stock is right now impacts your thinking one way or the other.

Speaker Change: Thank you for that and then for my follow up just hoping you could comment on.

Luke L. Junk: Capital allocation in any changes, maybe the update outlook for share repurchase and whether or not where the stock is right now and it impacts your thinking one way or the other thank you.

Jerome J. Rouquet: Thank you. Yeah, thanks. Thanks, Luke. So generally, I would say

Speaker Change: Yes, thanks, Thanks Luke.

Jerome J. Rouquet: Yes, thanks Luke. So generally, I would say since we initiated our 300 million share repurchase a year ago, we've been pretty active in share repurchases. We've purchased 126 million dollars worth of shares in four quarters, so it's a very large portion of our free cash flow that has gone back to share repurchases. What I want to highlight is that, in line with what we had mentioned a year ago as well, during our investor day, we want to have a very balanced capital allocation strategy.

Speaker Change: Generally I would say is since we've initiated our $300 million share repurchase.

Jerome J. Rouquet: A year ago.

Jerome J. Rouquet: <unk> been pretty active on share repurchases, we've purchased in four quarters $126 million worth of share. So it's a very large portion of our free cash flow that has gone back to share repurchases.

Jerome J. Rouquet: What I wanted to highlight is that in line with what we had mentioned a year ago as well during our Investor day, we want to have a very balanced capital allocation strategy and.

Jerome J. Rouquet: And I think we've demonstrated this quarter again that we want to invest in the business. The Tunisia plant that we highlighted in Sachin's presentation is a great example of the type of capital allocation that we will continue to do.

Jerome J. Rouquet: And I think we've demonstrated this quarter again that we want to invest in the business.

Jerome J. Rouquet: In Asia plants and that we've highlighted.

Jerome J. Rouquet: <unk> presentation is a great example of the type of capital allocation that we will continue to do.

Jerome J. Rouquet: We are obviously investing in engineering, in capital expenditures, on displays, and on electrification. On displays, for example, we are seeing a lot of good momentum with display technologies these days. And we're looking as well at how we can integrate more on the manufacturing side of display. So a lot of activity is going on these days on internal growth and internal capabilities that would help our returns. The second piece we are looking into are areas that could help us get more margin-equivalent type returns.

Jerome J. Rouquet: We are obviously investing in engineering and capital expenditures on display on electrification on display for example, we are seeing a lot of good momentum.

Jerome J. Rouquet: Display technologies these days and we're looking as well at how can we integrate more on the manufacturing side on display so a lot of activities going on these days on.

Jerome J. Rouquet: Total growth and internal capabilities that would help our.

Jerome J. Rouquet: Our returns.

Jerome J. Rouquet: The second piece, we are looking into or as well areas that could help us.

Jerome J. Rouquet: Getting more margin accretive type.

Jerome J. Rouquet: And we are thinking about software, cloud compute technology, and services. And for this, we are looking obviously at our capabilities but, as well, at potentially bolt-on acquisitions that could enhance these capabilities. And we think that with the disruptions that are going on in the market these days, there's probably some opportunity. So we are remaining pretty active in these areas. And obviously, we'll make sure that we always look at something that potentially could be a good fit. So we are definitely looking at a very balanced approach to capital allocation.

Jerome J. Rouquet: Turns and we are thinking about software cloud compute technology that includes services and for this we are looking obviously at our capabilities, but as well.

Jerome J. Rouquet: Potentially bolt on acquisition that could enhance these capabilities and we think that with the disruptions that are going on in the market. These days, there's probably some opportunities. So we are remaining pretty active in these areas and.

Jerome J. Rouquet: And obviously, we'll make sure that we always look at something that potentially could be a good fit so.

Jerome J. Rouquet: We are definitely looking at a very balanced.

Jerome J. Rouquet: Approach to capital allocation.

Luke L. Junk: I'll leave it there. Thank you.

Speaker Change: I'll leave it there thank you.

Operator: Thank you. Your next question is from the line of James Picariello with BNP.

Speaker Change: Thank you.

James Albert Picariello: Your next question is from the line of James Pickerel with BNP.

James Albert Picariello: Hi everybody. Just a question on currency first. So last year saw a transactional earnings hit of $24 million. Can you just confirm what's embedded in the full year guide, both from the sales and EBITDA perspective for FX, and sorry if I missed this, what those impacts were in the quarter as well?

Speaker Change: Hi, everybody.

James Albert Picariello: Just a question a question on currency <unk>.

James Albert Picariello: Last year saw a transactional earnings hit of $24 million.

Speaker Change: Can you just confirm what's embedded in the full year guide both from the sales and EBITDA perspective for FX and sorry, if I missed this what those impacts were in the quarter as well. Thanks, Yeah. So we had highlighted a small.

Jerome J. Rouquet: Yeah, so we had highlighted a small headwind in terms of exchange for the full-year guide for 2024 in the 1% range for both sales as well as EBITDA. What we saw in Q1 was pretty much in line with that, in fact, even slightly lower. We had, to give you the exact numbers, our impact on sales was 5 million negative headwind coming from currencies, and then the EBITDA impact was $3 million. So nothing major. We remain fairly well hedged. Naturally, we have maybe potentially a little bit more exposure here and there, but generally, we've not had significant currency headwinds or tailwinds, for that matter.

Jerome J. Rouquet: Headwind in terms of exchange for the full year guide for 2024.

Jerome J. Rouquet: The 1% range.

Jerome J. Rouquet: For both sales as well as EBITDA.

Jerome J. Rouquet: What we saw in Q1 was pretty much in line with that is in fact, even slightly lower we had to give you the exact numbers or impact on sales was $5 million negative headwind on.

Jerome J. Rouquet: Coming from currencies, and then EBITDA impact was $3 million.

Jerome J. Rouquet: So nothing major we re.

Jerome J. Rouquet: Renamed fairly well hedged naturally we have maybe potentially a little bit more exposure here and there, but generally we have not had significant.

Jerome J. Rouquet: Currency headwinds.

Jerome J. Rouquet: Or tailwind in fact for that matter.

James Albert Picariello: Got it. Thank you. And then, just in regard to the two-wheeler market for displays, can you help to mention at all how the average display content on a two-wheeler program compares to what you have in your standard display backlog for a light vehicle?

Speaker Change: Got it. Thank you and then just.

James Albert Picariello: In regards to the tubular market for displays can you help dimension at all how the average despite content on the <unk> program.

James Albert Picariello: Impairs too.

James Albert Picariello: What you have in your standard space backlog for yes for light vehicle.

Sachin S. Lawande: Yeah, let me maybe take a higher perspective, a high level perspective on how we see two-wheelers and how they could help us here in our more near-term growth. Now, two-wheelers are a fairly large market. There are about 25 million units today. And I'm only looking at two-wheelers outside of China, which is what we think is our addressable market. So, India, Southeast Asia, Japan.

Speaker Change: Yeah, Let me maybe take a higher.

Sachin S. Lawande: Higher up perspective, a high level perspective on how we see two wheelers.

Sachin S. Lawande: And how that could help us here.

Sachin S. Lawande: More near term growth now two wheelers is a fairly large market, it's about 25 million units today.

Sachin S. Lawande: And I'm only looking at two wheelers outside of China, which is what we think is addressable markets of India Southeast Asia, Japan.

Sachin S. Lawande: And historically, that market has used very low cost, mostly mechanical, you know, clusters, which are following the same trends that that market is impacted by as passenger vehicles, namely, digitalization and electrification, are following the same trends that we are seeing in passenger cars. So we feel that some portion of that 25 million market, which is growing fairly rapidly, will switch over to more of a digital cost. And we have started to make really good progress in that market.

Sachin S. Lawande: And.

Sachin S. Lawande: Historically the market is used very low cost.

Sachin S. Lawande: Mostly mechanical.

Sachin S. Lawande: Clusters, which on account of the same trends that that market is impacted by his best new vehicles, namely digitalization and electrification are following the same trends that we are seeing in passenger cars. So we feel that some portion of that $25 million market, which.

Sachin S. Lawande: Is growing fairly rapidly.

Sachin S. Lawande: Switch over to more of a digital cockpit and we have started to make really good progress.

Sachin S. Lawande: So if you think about the top customers there, it's Honda, it's Hero, Royal Enfield, etc., TVS. We have current business with all of the key players, but we also have business with the ones that are more higher end. We talked about Harley-Davidson previously, and also we have a business that we're working on with BMW Motorrad. So our footprint in that market is growing, and that market has needs for different price points and different levels of content, all driven by two things, with the content coming largely through smartphone connectivity.

Sachin S. Lawande: In that.

Sachin S. Lawande: Market. So if you think about the top customers there.

Sachin S. Lawande: It's zero.

Sachin S. Lawande: Oil and food.

Sachin S. Lawande: Etc. TBS, we have current business with all of the key players, but we also have business with the once that are more are in Ohio, and we talked about Harley Davidson previously and also.

Sachin S. Lawande: We have a business that we are working on with BMW moderate so.

Sachin S. Lawande: Footprint in the market is growing and that debt.

Sachin S. Lawande: Market has needs for different price points and different levels of content, all driven by two things more digital displays the sizes vary from four two inches to about seven inches and the content coming largely through the smartphone connectivity.

Sachin S. Lawande: And so we are extremely well positioned, as you can imagine, in that segment with our footprint, the products that we are already offering on the passenger vehicle side of the transportation market. And today, I would say our revenues are fairly small, probably no more than between 1% to 2%. But we think we can more than double that by 2026. And the product introduction time in that market is much shorter, in many cases, about 12 months.

Sachin S. Lawande: So we are extremely well positioned as you can imagine in that segment without footprint. The products that we are already offering to the passenger vehicle side of the transportation market and today.

Sachin S. Lawande: <unk>.

Sachin S. Lawande: Revenues are fairly small probably.

Sachin S. Lawande: No more than that.

Sachin S. Lawande: Between 1% to 2%, but we think we can more than double that by 2026 and the.

Sachin S. Lawande: Product introduction time in that market is much shorter.

Sachin S. Lawande: In many cases.

Sachin S. Lawande: So that's something that has got us excited because the trend is now really picking up steam, and we are in a very good position to take advantage of it. And it can help de-risk a little bit of our 2026 target.

Sachin S. Lawande: Months. So that's something that has got us excited because the trend is now really picking up momentum.

Sachin S. Lawande: Very good position to take advantage of it and it can help de risk a little bit of our 2026.

James Albert Picariello: That's very helpful. Just a very quick follow-on, is it a similar list of competitors for the displays today, or actually not, in fact, the competitors are?

Speaker Change: That's very helpful.

James Albert Picariello: A very quick follow on is it a similar list of competitors.

James Albert Picariello: For the displays.

James Albert Picariello: Or.

James Albert Picariello: Exited not in fact, the competitors are much more I would say regional players of debt.

Sachin S. Lawande: Actually, not really. In fact, the competitors are much more, I would say, regional players, and I would not put them in the same category as the passenger vehicle competitors.

Sachin S. Lawande: Yes.

Sachin S. Lawande: <unk> not put them in the same category as the passenger vehicle competitors.

Operator: Your next question. It's from the line of Itay Macaulay with Citi Research.

Sachin S. Lawande: Thanks.

Itay Macaulay: Your next question.

Itay Macaulay: This is from the line.

Itay Macaulay: Kelly with Citi Research.

Itay Macaulay: Great, thanks. Good morning, everyone.

Itay Macaulay: Great. Thanks, Good morning, everyone. Just a couple of follow ups for me.

Itay Macaulay: Just a couple follow-ups for me. First, maybe on the bookings, Sachin. I'm hoping maybe you can share what you might be targeting for the full year for bookings. And second, I know it's only a couple months since you updated it, but any updated thoughts on the 2026 revenue target, any kind of puts and takes that have changed in the last couple of months, either good or bad, in the bridge to 2026?

Itay Macaulay: Maybe on the bookings such and hoping maybe you can.

Sachin: Sure what you might be targeting.

Itay Macaulay: For the full year for bookings and second.

Itay Macaulay: It's only a couple of months since you updated it but any just updated thoughts on the 26 revenue targets any kind of puts and takes we've changed the last couple of months either either good or bad in the bridge to 'twenty six.

Sachin S. Lawande: Yeah. Thanks, Rita.

Itay Macaulay: Yes.

Sachin S. Lawande: And I'll just put, you know, our new business for wind performance in Q1 in context. So, if you think about what we were able to achieve in 2023, over $7 billion in wind, that was largely because the Digital Corporate Awards started to come back to the levels that we had seen prior to the dip that we experienced due to COVID and semiconductor constraints. And then added on top of that, we had our electrification winds. Now, if you look at Q1, there were $1.4 billion in wind power, mostly from Digital Corporate. We did not have any electrification winds in Q1, just the nature of the awards timing.

Speaker Change: Thanks, Peter and I will just put.

Speaker Change: Our new business win performance in Q1 in context, So if you think about.

Sachin S. Lawande: What we were able to achieve in 2023 over $7 billion of wins.

Sachin S. Lawande: That was largely because the.

Sachin S. Lawande: Digital cockpit award.

Sachin S. Lawande: <unk> started to come back to the levels that we had seen prior to the dip that we experienced due to covered in semiconductor.

Sachin S. Lawande: Constraints.

Sachin S. Lawande: And then added on top of that we had our electrification wins now if you look at Q1, the $1 4 billion and Vince mostly from digital cockpit.

Sachin S. Lawande: We did not have any electrification wins.

Sachin S. Lawande: In Q1.

Sachin S. Lawande: Each of the award timing.

Sachin S. Lawande: So, that's a great start, I would say, to the year. The pipeline of opportunities also looks very robust, virtually for all of the product lines, including electrification, where we have opportunities for both BMS as well as power electronics. And it really reflects, you know, the strength of our product portfolio and the fit to the trends that they have. And at the same time, it helps us smooth out some of the inherent lumpiness in any one of the product categories.

Sachin S. Lawande: That's a great start I would say to the year the pipeline of opportunities also looks very robust.

Sachin S. Lawande: Actually for all of the product lines and.

Sachin S. Lawande: Including electrification, where we have opportunities for both BMS as well as power electronics and it really reflects the strength of our product portfolio in the third to the trends that that they have.

Sachin S. Lawande: And at the same time it helps us smooth out some of the inherent lumpiness in any one of the product.

Sachin S. Lawande: Categories. So we believe for the full year, we should be in a position to exceed $6 billion in sales.

Sachin S. Lawande: So, we believe for the full year, we should be in a position to exceed $6 billion in sales, hopefully, similar to last year. And when it comes to 2026, I just want to make a couple of points. We will provide more details at some point later in the year.

Sachin S. Lawande: Hopefully.

Sachin S. Lawande: Similar to last year and when it comes to 2026 I just wanted to make.

Sachin S. Lawande: A couple of points right, we will provide.

Sachin S. Lawande: More details at some point here.

Sachin S. Lawande: But if you think about the foundations of our 2026 outlook, they were built on an expectation of a sales growth kegger of 8% on 2023 levels. Now, if you think about what we have accomplished in the prior years, both 2022 and 2023, our sales growth was higher than that. And on top of that, we have won high levels of business, both in 22 and 23, and it seems like we're going to see that continue in 24. So that should put us in a good position to, you know, accomplish this 8% CAGR sales growth that we would need to achieve our 2026 targets.

Sachin S. Lawande: Later in the year, but if you think about the foundations of our 2026 outlook. There were built on a expectation of sales growth CAGR of 8% on 2023 levels.

Sachin S. Lawande: Now if you think about.

Sachin S. Lawande: What we have accomplished in the prior years, both 2022 and 2023, our sales growth was higher than that and on top of that we have one high levels of business. Both in 'twenty, two and 'twenty three and it seems like we're going to see that continue in 'twenty four so that should put us in a good position to.

Sachin S. Lawande: Accomplish this 8% CAGR sales growth that we have.

Sachin S. Lawande: It would need to achieve our <unk> targets.

Jerome J. Rouquet: That's very helpful. Thanks, Sachin. And maybe just as a follow-up, maybe for Jerome, you had really good margin performance in the quarter, despite some of the customer vehicle launch delays that you outlined. So, with revenue expected to improve for the rest of the year, how should we think about the puts and takes of the sequential incremental margin?

Speaker Change: That's very helpful. Thanks, and maybe just as a follow up maybe for Jim.

Jerome: Really good margin performance in the quarter. Despite some of the customer vehicle launch delays that you outlined with revenue expected to improve for the rest of the year, how should we think about the puts and takes of the sequential incremental margins.

Jerome: Yes, so we had.

Jerome J. Rouquet: Yeah, so we had pretty decent margins, in fact, in Q1. It was a solid start to the year. And to your point, we were at 11% overall margin with sales being slightly lower than what we had exiting 2023. So I would say it was a fairly clean quarter, a minimal amount of one-timers, pretty good on operational execution, including launches. And I would say that our cost controls remained pretty strong.

Jerome: Except margins impacting in Q1 was a solid start of the year.

Jerome J. Rouquet: And to your point.

Jerome J. Rouquet: We were at 11% overall margin with sales being slightly lower than what we had exiting 2000 22023. So.

Jerome J. Rouquet: I would say it was a fairly clean quarter, a minimal amount of one timers.

Jerome J. Rouquet: Pretty good on operational.

Jerome J. Rouquet: Accretion.

Jerome J. Rouquet: Joining launches and I would say that our cost controls remains pretty strong and another thing as well I'd like to highlight is the fact that we were able to negotiate a lot of our.

Jerome J. Rouquet: And another thing I'd like to highlight is the fact that we were able to negotiate a lot of our annual pricing as well as recoveries already in Q1. So that kind of de-risks a little bit the rest of the year. So as we look at the second quarter, I've highlighted that we would have a level of sales that would be slightly over a billion. The way we're thinking about it in terms of margin progression is still going with the high double-digit incrementals that we've been using in the past few quarters or years, maybe with the exception of engineering, which will continue to increase a little bit in Q4 from a gross engineering standpoint.

Jerome J. Rouquet: Annual pricing as well as recoveries already in Q1, so it kind of de risks.

Jerome J. Rouquet: The rest of the year. So as we look at the second quarter Ive highlighted that we would have.

Jerome J. Rouquet: Yes.

Jerome J. Rouquet: Our level of sales that would be slightly over $1 billion. The way, we're thinking about it in terms of margin progression is still.

Jerome J. Rouquet: Going with.

Jerome J. Rouquet: The.

Jerome J. Rouquet: High double digit incrementals that we've been using in the past few quarters or years.

Jerome J. Rouquet: With maybe the exception of engineering that will continue to increase a little bit in Q4 from a gross engineering standpoint, and then we will see later in the year improvement on the recovery side. So.

Jerome J. Rouquet: And then we'll see improvement on the recovery side later in the year. So, generally, that's how Q2 should shape up. And then for the second half of the year, we'll obviously have revenues that will be in excess of $2 billion. And then we are thinking about incrementals as well in the same way, with a slight benefit coming from engineering because of the recoveries. So that's how we think the year will develop. But again, a very good base in Q1 with a 11% EBITDA margin. Terrific; I appreciate all that.

Jerome J. Rouquet: Generally that's how Q2 should shape up and then for the second half of the year.

Jerome J. Rouquet: I'll have obviously revenues, which will be in excess of $2 billion.

Jerome J. Rouquet: And then we are thinking about incrementals as we are in the same way with.

Jerome J. Rouquet: A slight benefit coming from engineering because of the recoveries. So thats, how we think.

Jerome J. Rouquet: Ara will well will develop but again a very good day.

Jerome J. Rouquet: As in Q1 with 11%.

Jerome J. Rouquet: EBITDA margin.

Jerome J. Rouquet: Terrific, I appreciate all that detail. Thanks so much.

Speaker Change: Perfect I appreciate all that detail. Thanks, so much.

Speaker Change: Thank you.

Operator: Your next question is from the line of Shreyas Patel with Wolf Research.

Jerome J. Rouquet: Your next question is from the line of <unk> Patel with Wolfe Research.

Shreyas Patel: Hi, thanks so much for taking the question. Maybe just one to just confirm. So, you know, as you think about this quarter, you know, I think, Jerome, in the past, you've kind of talked about, you know, normalized margin is somewhere around 11%. That's kind of what you achieved in the fourth quarter. You know, for the full year, I think the guide is for somewhere around 11.7%. So as we kind of think about the levers of upside there, growth is obviously one factor, but I'm just curious how you think about cost performance, you know, relative to increases in engineering or SG&A.

Shreyas Patel: Alright, thanks, so much for taking the question.

Speaker Change: Maybe just one.

Shreyas Patel: Just to confirm so the.

Shreyas Patel: As you think about this.

Shreyas Patel: This quarter I think Jerome in the past you've kind of talked about.

Shreyas Patel: Normalized.

Shreyas Patel: Margin is somewhere around 11% that's kind of what you achieved in the fourth quarter.

Shreyas Patel: For the full year.

Shreyas Patel: I think the guidance for somewhere around 11, 7%.

Shreyas Patel: So as we kind of think about the.

Shreyas Patel: The library.

Shreyas Patel: Upside there.

Shreyas Patel: Growth is obviously one factor, but just curious how you think about <unk>.

Shreyas Patel: Cost performance relative to.

Shreyas Patel: Increases in engineering or our SG&A.

Jerome J. Rouquet: Yes, so to your point, 11.8% for the full year in terms of the guidance at the midpoint. So we're running pretty much on track in terms of the drivers that are going to help us get to 11.8%. Obviously, volume and scale have been very important for us, but at the same time, and we saw that already in Q1 versus the prior year, where we gained 70 basis points of margin, execution, productivity, and efficiencies are drivers that have been helping us tremendously over the years, and they did in Q1.

Speaker Change: Yes so.

Jerome J. Rouquet: Your point.

Jerome J. Rouquet: 11, 8% for the full year in terms of the guidance at the midpoint.

Jerome J. Rouquet: So we're running pretty much on track.

Jerome J. Rouquet: In terms of the drivers that are going to help us.

Jerome J. Rouquet: Getting to the 11, 8%, obviously volume and scale has been very important for us, but at the same time and we saw that already in Q1 versus prior year.

Jerome J. Rouquet: Where we gained 70 basis points of margin.

Jerome J. Rouquet: Execution productivity efficiencies are.

Jerome J. Rouquet: Drivers that have been helping us tremendously over the years and it did in Q1. So that's another driver that youll see as well as we go through the year in terms of England.

Jerome J. Rouquet: So that's another driver that you'll see as well as we go through the year. In terms of engineering, we're still planning to be in the mid 5% range in terms of engineering as a percent of sales, and SG&A in the mid 4%. So it's very consistent with what we were talking about two months ago, and that implies that engineering will go up slightly as we go throughout the year, but given the sales level, percentages will go down, and it's a little bit the same for SG&A.

Jerome J. Rouquet: Planning to be in the mid 5% range in terms of engineering as a percentage of sales and SG&A in the mid four percents.

Jerome J. Rouquet: So it's very consistent with what we have.

Jerome J. Rouquet: Then talking about two months ago and that implies that engineer. It will go up slightly as we go throughout the year, but given the sales level.

Jerome J. Rouquet: Percentages will go down and it's a little bit the same for SG&A.

Shreyas Patel: Okay, all right, thanks. And then maybe just maybe looking beyond this year, you know, I guess trying to think about, you know, the incremental margins that you've been expecting for the next few years. I think you're, you know, if you exclude price recoveries, you're talking about sort of high teens, incrementals. And I'm just wondering, in the context of the kind of products that you're supplying, the amount of technology that's going into things like SmartCore and, obviously, your own software that you're incorporating, do you see opportunities for that to be better?

Speaker Change: Okay, Alright, Thanks, and then maybe just maybe looking beyond this year.

Shreyas Patel: I guess trying to think about.

Shreyas Patel: Yeah.

Shreyas Patel: The incremental margins that <unk> been expecting for the next few years I think.

Shreyas Patel: The price recovery is youre talking about sort of high teens, Incrementals and I'm just wondering in the context of the kind of products that you're supplying.

Shreyas Patel: The amount of technology, that's going into.

Shreyas Patel: Things like smart core.

Shreyas Patel: Your own software that Youre that youre, incorporating do you see opportunities for that to be better.

Shreyas Patel: Because I guess when we just look at regular suppliers, we typically see incremental margins of somewhere around 20 to 30%. And given the amount of value-add that you're providing, one would assume there's opportunity for that to be better. Thanks. Yeah, so, so on.

Shreyas Patel: I guess when we just look at regular suppliers, we typically see incremental margins of somewhere around 20% to 30% and given the amount of value add that you are providing.

Shreyas Patel: One would assume there is opportunity for that to be to be better. Thanks.

Speaker Change: Yes. So first let me take that this is such an we do see opportunities in the mid term to drive more of a software and services driven.

Sachin S. Lawande: Yeah. So first, let me take that. This is Sachin.

Sachin S. Lawande: We do see opportunities in the midterm to drive more of a software and services-driven business opportunity in addition to our products, or I should say alongside our products. And that would have an incremental or creative margin opportunity associated with that business. That's what Jerome alluded to earlier as being part of our focus as we broaden our business. We have been largely focused on a platform approach as a margin driver in the past couple of years.

Sachin S. Lawande: Business opportunity.

Sachin S. Lawande: In addition to our products or I should say alongside our products.

Sachin S. Lawande: And that would have a.

Sachin S. Lawande: Incremental.

Sachin S. Lawande: Accretive margin opportunity associated with that business, that's what Ron alluded to earlier as being part of our focus as we.

Sachin S. Lawande: Broadened our business, we were largely focused on.

Sachin S. Lawande: Our platform approach as a margin driver in the past couple of years, we've seen the benefits of that in.

Sachin S. Lawande: We've seen the benefits of that in our current performance. And now, as we drive more of a platform strategy, we can go forward with an IP-led services strategy for software with the same customers that we are providing the hardware to. As these systems need their updates, incremental feature updates, these things start to come into play. And we are building ourselves up for that opportunity as we go forward.

Sachin S. Lawande: Current performance and now as we drive more of a platform strategy now we can go forward with the IP led services strategy for software with the same customers that we are providing the hardware to as these systems need over there updates incremental feature updates these things start to come.

Sachin S. Lawande: Going to play and we are.

Sachin S. Lawande: Building ourselves up for that opportunity as we go forward from here.

Operator: Your next question is from the line of Mark Delaney with Goldman Sachs.

Operator: Okay.

Operator: Your next question is from the line of Mark Delaney with Goldman Sachs.

Mark Trevor Delaney: Yes, good morning. Thanks for taking the questions. You mentioned VMS was off to a strong start in 1Q, but I'm hoping to better understand how Visteon is thinking about the year. Last quarter, I think Visteon said it was using a more conservative view on EV volumes and its guidance for 24 than customer forecasts, and I'm hoping to understand if that's still the case.

Mark Trevor Delaney: Yes. Good morning, Thanks for taking my questions. You mentioned the BNS is off to a strong start and one key but I'm, hoping to better understand how visteon is thinking about the year last quarter I think that's the answer that I was using a more conservative view on EV volumes in its guidance for 24, then customer forecasts and I'm, hoping to understand if thats still the case.

Sachin S. Lawande: Yeah, no, the short answer is yes, definitely. We are maintaining our guidance for the full year. I'm really happy that the first quarter has come strong, and it looks like the Q2 momentum is also pretty robust. And as we discussed previously, the pipeline of how the BMS is shipped to the customer and then eventually launched into the vehicle is a little bit longer than, then say, our other products.

Speaker Change: Yes, no. The short answer is yes, definitely we are maintaining our guidance for the full year I'm really happy that the first quarter has come in strong and it looks like the Q2 momentum is also pretty robust.

Sachin S. Lawande: And as we discussed previously.

Sachin S. Lawande: The pipeline of how the BMS is shipped to the customer and then eventually launched into the vehicle that has a little bit longer than other products. So.

Sachin S. Lawande: So, we are pretty comfortable with that strong performance for the next couple of quarters, and then we will have to see how it develops beyond that. So, for now, I think it is still appropriate to take a slightly conservative perspective that we have in our original guidance for the year, and then we'll update it if things look different.

Sachin S. Lawande: We are pretty comfortable with that strong performance for the next couple of quarters and then we will have to see overdeveloped beyond that so for now I think that is still appropriate to take a slightly conservative perspective that we have in our original guidance for the year.

Sachin S. Lawande: And then we'll update it.

Sachin S. Lawande: Things look different.

Mark Trevor Delaney: the total context thing. So my second question was trying to understand some of the share gain opportunities. I think one opportunity for Visteon has been to gain share at customers in Japan. You spoke about some wins in one queue with Japanese out of OEMs. But could you put that into some broader context about how well Visteon is doing with its goal to gain traction in the region? Thanks. Absolutely.

Mark Trevor Delaney: That's helpful context, Thanks, and my second question was just trying to understand some of the share gain opportunities I think one opportunity for Visteon has been to gain share at customers in Japan is focused on wind and one key with Japanese auto Oems, but could you put that into some broader context about how well <unk> is doing with its golar.

Mark Trevor Delaney: Gained traction in the region.

Sachin S. Lawande: Absolutely. I think that's a great question and a topic that I think needs to be properly discussed. Historically, we have been underrepresented in Japan. So, our customers have been Mazda and Nissan, with whom we have been doing business for a number of years. And at the same time, this rapid pace of digitalization, in particular, and I would also say electrification, but first digitalization, is creating opportunities for us to grow with other OEMs, notably Toyota and Honda. And these are, as you know, very large. They have a large share of the global LVP market.

Mark Trevor Delaney: Absolutely.

Speaker Change: Great question.

Sachin S. Lawande: That I think needs to be properly discussed.

Sachin S. Lawande: Historically, we have been underrepresented in Japan, so our customers have been Mazda and Nissan with whom we have been doing business for a number of years.

Sachin S. Lawande: And at the same time this rapid pace of digitalization in particular.

Sachin S. Lawande: And I would also say electrification, but first digitalization is creating opportunities for us to grow with other Oems, notably Toyota and Honda and these are as you know very large they have lost share of the global MVP and we have had a very small level of business with them over the last few years.

Sachin S. Lawande: And we have had a very small level of business with them over the last few years. We have been, for the last couple of years, or a little bit longer than that, making a particular focus on working with these customers. I've been personally visiting these customers a number of times, did that earlier this year.

Sachin S. Lawande: We have been for the last couple of years.

Sachin S. Lawande: A little bit longer than that maybe a particular focus to work with this customers I've been.

Sachin S. Lawande: Personally visiting these customers a number of times.

Sachin S. Lawande: Did that earlier this year.

Sachin S. Lawande: And I'm very happy to share that we have been gaining a lot of traction, especially with Toyota. One of the wins that we talked about this quarter is a large win for vehicles that are going to be launched in regions outside of Japan. And it's really important for us that we are represented there. And to me, there's still a lot of opportunity for us with Toyota, with Honda, to grow. And also with some of the two-wheeler OEMs in Japan, Honda, two-wheelers, Yamaha, and Suzuki. So it feels like the time is right, our product fits, and the focus is really also appropriate. So this is an area where we will be investing more of our time and resources.

Sachin S. Lawande: And I'm very happy to share that we have been gaining a lot of traction.

Sachin S. Lawande: Especially with Teradata, one of the wins that we talked about on this quarter is a large win for vehicles that are going to be launched in regions outside of Japan.

Sachin S. Lawande: And it's really important for us that we haven't presented there and to me there is still a lot of opportunity.

Sachin S. Lawande: Still with Toyota with Honda to grow and also with <unk>.

Sachin S. Lawande: Some of the tubular Oems in Japan, a Honda two wheelers Yamaha Suzuki.

Sachin S. Lawande: No.

Sachin S. Lawande: Feels like the time is right our product fit and the focus is really also appropriate. So this is an area, where we will be investing more of our time and resources.

Sachin S. Lawande: This concludes our earnings call for the first quarter of 2024. Thank you everyone for participating and your ongoing interest in Visteon. Thank you. This concludes Visteon's first quarter 2024 results.

Sachin S. Lawande: This concludes our earnings call for the first quarter of 2024. Thank you everyone for participating and your ongoing interest in Visteon. Thank you.

Operator: This concludes Visteon's first quarter 2024 results earnings call. You may now disconnect.

Sachin S. Lawande: This concludes Visteon <unk> first quarter 2024 results earnings call you may now disconnect.

Operator: Please wait; the conference will begin shortly.

Operator: Please wait the conference will begin shortly.

Operator: [music].

Operator: Yes.

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: Yeah.

Operator: Okay.

Operator: [music].

Operator: Yes.

Operator: Sure.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Thanks.